Retail group Shinsegae is looking to fully acquire Starbucks South Korea by buying out its joint venture Starbucks US.
Shinsegae’s subsidiary E-mart currently owns 50 per cent of Starbucks South Korea, while the US headquarter owns the remaining. According to The Korea Times, the reason behind the decision is that the South Korean group sees the significant growth of the coffee chain in the country despite the Covid-19 pandemic.
A person from the industry unveiled that Shinsegae Group considered giving up its 50 per cent stake in Starbucks Korea before shifting its stance towards buying the remaining stake. The acquisition deal, if happens, is estimated to value at more than US$886 million.
If the deal is closed, E-Mart is expected to receive twice the dividends from Starbucks South Korea. However, E-mart still has to pay 5 per cent in for trademarks and other licensing out of its revenue.
“While we are having thorough reviews on the topic internally, nothing has yet been confirmed,” said a spokesperson from Shinsegae.
Last year, Starbucks South Korea generated about $1.7 billion in revenue. Starbucks Korea and E-mart each paid about $26.6 million in dividends to the Starbucks US headquarters.